I ran into the weirdest problem just now. Windows Live Mail (WLM) would not get out of working offline mode! It didn’t matter how many times I pressed send/receive and confirmed that I wanted to go on-line, nor did it help to directly press the button to switch to on-line mode. Extremely annoying!

I did quick search and found the answer pretty quickly on this posting:

The work offline mode in WLM is connected and overrun by the setting in Internet Explorer (IE). If you switch to offline mode in WLM, IE also goes to working offline. However, the other way around is not true. If you try to leave offline mode through WLM it will not work. You have to first close WLM, then open IE, toggle working offline so that it is showing online presence. It might show online for starters, then you need to toggle it back and forth.